China’s financial sector used to be famous for its poor service and imperviousness to innovation. Even today, when customers go to make a transaction at one of the country’s big state-run banks, they often take a bag of snacks with them—they know they’re in for a long wait. But things are changing fast in the Middle Kingdom. A new generation of digital finance firms is taking the country—and the global markets—by storm in everything from digital payments and micro-lending to insurance and wealth management. How will China’s lumbering state-run banks react? Will tightening regulation nip this revolution in the bud?
Historians say that paper currency was invented by the Chinese during the Tang Dynasty. Today, their descendants are taking the lead again: Young Chinese are abandoning cash. Shop anywhere in China–from a grand shopping mall to a small street vendor–and you can use your smartphone to pay. Of course, the wide acceptance of smartphones and 4G internet is one thing, the rise of fintech firms like Ant Financial is another. Yet to seriously phase out cash, authorities and professionals are pursuing something more than just QR codes: digital currencies based on blockchain technology. Despite the cracking down on unfavorable operations like ICOs, China is studying blockchain in a rather serious way.
WeChat is not just a messaging app. With nearly a billion active users, it is used to make voice calls, play games, read news, hail cars and more. With WeChat Pay, people use the app to send money and pay bills by scanning a QR code, and friends and families use WeChat to send lucky money during festivals. For many, WeChat is already indispensable. How did the company grow? What were the key decisions and strategies? In the fierce competition between WeChat pay and Alibaba’s Alipay, who will win? There are many questions about WeChat, but the app’s success is certain—for now.
The upsurge in mobile transaction services used through smartphones is at the heart of a sudden expansion of the online financial services industry in China. This is a diverse and dynamic marketplace with investment, small-lending companies, peer to peer (P2P) lending, and most recently the emergence of the first batch of online-only banks: MYbank, 30% owned by Ant Financial (founded by Alibaba), and WeBank, which is 30% owned by Tencent. These new services provide a much-needed expansion of financial access for Chinese consumers and small and medium-sized enterprises (SMEs), that have long been underserved by the state-dominated banking system. What lies ahead for China’s online banks?
This year Alibaba broke all records on Singles Day with sales of $14.3 billion. Singles Day, or China’s Black Friday, was first invented by Alibaba in 2009. The idea was to create an annual sales event with crazy discounts supposedly for those who are single. (The fact that everyone, irrespective of their romantic status, jumped in and shopped is a different matter altogether.) This year a whopping 95 million users joined the cyber shopping fest. In other words, approximately almost one out of eight people in the world clicked the “buy” button on Alibaba’s marketplaces. What did it take to pull this off?
In a short space of time Alibaba’s Ant Financial has created—and scaled—a diverse set of financial products and services: from online payments to cloud computing and data services.
Mobile wallets are taking off in China but it is too early to say what they mean for the use of cash and bank cards.
In a bid to prevent users from venturing out of their proprietary environment, Alibaba and Tencent are aggressively adopting a walled garden strategy.
Long kept at arm’s length, will foreign bank card companies finally get a fair crack at the China market which is dominated by UnionPay?
With its huge scale and steps toward global dominance, can anyone rival Alibaba’s might in China’s e-commerce sector?